Original Content Sourced from Dan Eagles, Director at ProSpace

“What is the true cost of delivering a new Retail Store?”

A question we get asked a lot, is “How much will it cost to fit out my store?” or “How much will my store cost?” before we start a project!

There are a lot of decisions that go into making up the cost of delivering a retail store, so engaging with professionals in this area is essential and explore their track record to ensure they have delivered stores that are similar to what you would like. It’s no use working with someone in the luxury space, if you are a value driven retailer or vice versa,  so finding the right fit is worth the time investment, as your going to spend a lot of time together to get it right.

We say that our relationships with our customers get pretty intimate, pretty quickly.

A very smart leader that I worked for across many years told me – “It’s the stores that you don’t open, that make you the most money!”

When you stop and think about this, one of the most important decisions you make when delivering on a physical retail space, is where its located, the potential customers you can attract and the commercial terms you agree on. So make sure the deal is the right one for you – not the landlord – and always ask for what you don’t think you are entitled too – worst case you will only get “no” as the response, best case “yes”!

Once you have a location secured, then you can start to work out how your customers will engage with the space and the best way to present your product. This may be delivering on what you know, or working with a Retail Designer to ensure you get it right. Either way, you will need to make sure you have clarity on both what the space will look like and also how to build it, so that this can be clearly communicated to contractors.

Without clarity – you can all but guarantee that you are going to pay more for the project in the long term.

What elements make up the key cost of delivering a retail store?

1. DESIGN

In most contemporary shopping centres now, you will need to engage a professional designer to deliver on your space. The approval process needs to be managed to maximise the impact of your store, whilst also achieve certification by private certifier or municipality. If the site is a high street location, you have more leniency, however you should still be aware of your obligations under the Building Code in your region and ensure you maximise the space.

2. BASE BUILDING COSTS

This is a hidden cost to a lot of our clients when they first start working with us, an unknown. In a mall environment, generally all mechanical and fire services are delivered by the asset manager, at the retailers cost. Negotiating these costs to be reduced prior to execution of the lease (if not covered by the landlord) is a critical cost saving measure. Similarly a level floor, stairs or disabled access, structural elements required to carry your fit out are all elements that can be undertaken as part of the “Base Building” and ad significant “Cost to a Retail Fit Out”.

3. MATERIALS

This is where cost can easily blow out and understanding what is available on the market is essential – working with a professional in this area can save thousands! Stone vs Man Made Stone vs Laminate. The cost differences are significant, as are the impact in the finished space. Working with our clients we aim to retain materiality in high touch locations and save in lower touch locations for the customer, resulting in a higher perceived value in the space.

4. LIGHTING

If anywhere, this is where we recommend you spend money. A badly delivered well lit space often looks better than an amazing space that is poorly lit. Lighting is everything at retail. Not only good quality fittings that have accurate colour rendering, which hero’s your product, but the right amount of light – so you don’t look like a 7-11 store nor the bat cave. The scene is set with the ambience created by in store lighting. Generally we would recommend somewhere around 5% – 7% of the cost of the fit out be spent on lighting fixture supply. [IA Hardware lighting range being released late 2018.]

5. FLOORING

This one can creep up on you, so be vigilant in understanding the floor that is being specified. What’s its durability, is it designed to be used in a commercial/retail space, how much is the material and how much does it cost to lay? All considerations when choosing the right product and application. The site conditions also have a bearing on how much your flooring will cost – as floor preparation can often be a similar amount as your flooring.

6. SIGNAGE & TECHNOLOGY

This one is very much, how long is a piece of string! There is a lot of cost associated with various technologies or signage formats in store, however when comparing capital cost you also need to weigh up the operational update of static signage vs simple update of digital signage. Its a great idea to start with a tech budget, that allows you to do something – and if decisions are made mutually with either business partners, consultants or suppliers to further support tech in store – then the decision is mutual. Numerous projects we have worked on a capital budget + hardware budget for digital.

7. FIXTURES & JOINERY

This is very dependent on the design of your store. In this case its important to have an idea of what you are looking for, as cost can quickly be absorbed in this area. Sourcing options do extend once you have timelines in control – where offshore supply may let you achieve a better or more detailed result with the same capital – or save significantly if you have more than one location to focus on. IA Hardware can help you with multiple sourcing options.

8. STAFF

Don’t forget that during the time your working on a new project, you have staff that are working on various aspects not associated with the build, from merchandise to operations. These staff costs need to be factored into the project, whilst also considering the time they are spending not focused on their day job! These costs can multiple easily, so focus on your existing operations are critical whilstworking the businesses next steps.

9. YOUR TIME

Similar to the above with your teams time, your time is also a finite asset. Ensure your time isn’t being consumed by the new project your working on and if it is, perhaps consider employing a project manager to take care of the project operations, allowing you to do what you do best? Another division of our business, Prospace Projectswas established to help in this situation. Client side project management with specific experience in retail.

10. QUALITY

This topic isn’t purposely last, but its one that is often only considered at the end of a project, when the quality of delivery isn’t there. It’s critical that your new store enjoys uninterrupted trade for the foreseeable future – which is helped by the lack of follow up required by contractors. The goal should be delivery ahead of time, with defects or remedial work completed before handover to you for stocking and trade. The ongoing costs to your business of completing these remaining items from a fit out, extend to staff being on site to supervise or provide access plus further impact to your customers or relationship with landlords.


The fundamentals of retail remain relatively unchanged, focused relentlessly on customer service, transporting you somewhere else within the environment, presenting a perspective on product that your customer can relate too and importantly; being where you want, when you want.

How this relates to your store? That’s a really good question. Its important to always think of what your doing next. If you wait for that time to come around when you realize you should be delivering on a specific part of your store experience, chances are you’re a year or two behind. By the time you budget for it, come up with the concept, ensure it works in the space, develop product to cater to it……. Time will elapse. Constantly think about what you could do, what you would like to do – and plan for it.

Create a 3 year plan. All of a sudden, those ideas will start to become reality and your evolution will continue!

Don’t be scared to research all the cool and directional things that are proposed around the “Store of the Future” as these will lead you to ask questions of your own business and how much your customer can tolerate. Push your customer but don’t alienate them.

More than anything ensure your stores are both current, engaging and above all else hero your product and brand!

Thinking of designing a new space – talk to Prospace Design



Need Essentials supplied for your next project – talk to IA Hardware